Summary
The May LST/FEI Arb declined from approximately -$180/mt on Apr 10 to below -$198/mt on Apr 24, driven by weaknesses in LST and strengths in FEI. LST spreads seem to stabilize above 12c/gal, while FEI spreads gain support from crack demand rhetoric, with trade houses buying into this weakness, holding a net position of almost 1mbbls in the past 2 weeks.
May FEI/CP witnessed significant buy-side interest from trade houses, with a peak net position exceeding 530kbbls on Apr 22. CP spreads surged to $25/mt on Apr 23, but there has been increased interest in buying both the FEI/CP and CP flat price since then.
For LST, CFTC data for the week to Apr 9, money managers significantly reduced short positions by over 55%, with a slight increase in long positions. However, by April 16, there was a reversal as short positions increased by 17%. Among prod/merc players, both long and short positions rose, possibly reflecting hedging activities at lower prices amidst weak crude and local demand.
EIA stats for the past two weeks showed a significant build in stocks of propane and propylene in the US. This was especially prevalent in the week to Apr 12 which saw a build of almost 4mbbls compared to the 500kbbls expected.
News
One of the strategic divisions within ADNOC is actively exploring the possibility of investing in UGI Corp.’s propane distribution subsidiary, AmeriGas.
On Apr 22, Saudi Aramco announced discussions regarding the potential acquisition of a 10% stake in Hengli Petrochemical. This deal promises to notably bolster the state-owned energy titan’s refining footprint within China. Hengli Petrochemical, a subsidiary of Hengli Group, oversees a 400kbpd refinery and an integrated chemicals complex situated in Liaoning Province, China.
In Teesside, a newly operational LPG terminal is set to enhance the nation’s off-grid energy security. This terminal will supply up to 90,000 tonnes of LPG annually to homes and businesses across northern England, Scotland, and North Wales, ensuring a reliable energy source for the region.
Tupras, the owner of refineries in Izmit, Izmir, Kirikkale, and Batman, Turkey, has an overall capacity of 602,000 b/d. They plan to invest $256 million to develop propylene splitter capacity at Izmir and Izmit refineries. Additionally, new storage capacity for propane and propylene is planned, along with a sales system facility project for the Izmir plant.
Prime Minister Bektenov of Kazakhstan met with leaders from SINOPEC and SIBUR LLC to discuss building a $7.7 billion gas chemical complex. SINOPEC officially joined the project, with KazMunayGas owning 40%, SINOPEC 30%, and SIBUR 30%.
